It’s the role of the Board and Executive Leadership to ensure a healthy future for the company. Securing access to a pipeline of talented senior executives is a critical component of sustained corporate success. But retaining and attracting executive leaders has become increasingly challenging. Risk aversion on the part of candidates has risen dramatically since 2016, in particular those considering international appointments. Meanwhile companies have little visibility in the medium to short-term making it more difficult to lay out a compelling vision and strategy.
In the first of two Overtures on ensuring a healthy corporate future, Fidelio argues that there are practical measures that companies can take to attract and retain senior executive talent even in an environment of profound uncertainty.
Retention & Motivation
The first and most important step of securing the talent pipeline is ensuring that existing employees are motivated and engaged. Research shows increasing focus on employee engagement; studies initiated by the Harvard Business Review, 2013, also demonstrate the link to improved business results.
In the UK the Board has recently been tasked with ensuring a healthy corporate culture, as set out in the Financial Reporting Council’s 2016 Paper ‘Corporate Culture and the Role of Boards’, the practical implementation typically resides with the Corporate Affairs Director, or the Group HR Director.
Fidelio has previously commented on how the scope of the Corporate Affairs function and role has grown substantially since the Financial Crisis. Indeed we have argued that an experienced Corporate Affairs Director adds significant value to the Top Table, most recently in ‘A Seat at the Table for the Communications Director?’ with Matthew Kirk, Global External Affairs Director, Vodafone.
Equally Fidelio’s ‘Brexit and the Implications for Board Composition’ with Sir Simon Fraser, former Under-Secretary, Foreign & Commonwealth Office provides a topical example of the value of Corporate Affairs: FTSE 100 Corporate Affairs Directors questioned some months before BREXIT correctly predicted the outcome, whereas Board Members questioned at the time were much closer to denial.
An effective Corporate Affairs Director provides a good early warning to external upheaval and, importantly, is also sensitive to the employee mood. Within the Corporate Affairs function Fidelio has also observed the ascendancy of Internal Communications. What used to be a backwater is now a lead user of innovative technologies and plays a vital role in employee motivation and engagement.
As a Search firm with an expertise in stakeholder engagement, Fidelio has seen the salary levels, sophistication and seniority increase for the Internal Communications role and we expect this to continue given the challenging times ahead.
A practical step to ensuring employee retention and motivation is enhancing Internal Communications. Equally investment in ongoing development, including at a senior level, strengthens employee engagement. Fidelio’s “A Seat at the Table” programme has seen strong appetite from leading corporates to develop senior female Executives and Directors, and equip them with the skillsets required to succeed to and at the Top Table.
Attracting & Securing Executive Talent
In order to weather the turbulence ahead companies will need to prove themselves innovative and adaptable, able to pivot and open to change. As such the ability to attract new skills and experience, including on an international basis, is critical to ensuring the healthy future of the company.
In both the UK and US, concerns about freedom of movement have left both business and employees unsettled, and created an atmosphere of uncertainty that increases the cautiousness of candidates considering a major career move.
UK employers start to feel pinch of EU labour shortages
The Financial Times, 13th February 2017
In order to attract and convince talented executives to join the organisation, companies must demonstrate commitment to the role and to the individual, and underscore the seriousness of their proposition.
The ability to attract senior Executive talent provides significant competitive advantage and in the next section of this Overture, we set out practical steps that employers can take to demonstrate long-term commitment and vision, and ultimately to inspire confidence.
Step 1 – Creating a Compelling Proposition
First and foremost the candidate has to be convinced by the role on offer. Of course the underlying role has to be coherent and attractive. A strong Candidate Brief can support this. This will provide a clear representation of the role within the business. Setting clear expectations also allows candidates to self-select, and provides clarity to all involved in the selection process.
A well thought-out Brief demonstrates to candidates the employer’s commitment to the role. It also provides a focal point for clients to return to during the interview process, in order to benchmark preferred candidates. Fidelio lays significant value upon a strongly crafted, forward-looking Candidate Brief, communicating clearly the deliverables of the role, how these link to the corporate objectives, as well the culture and values of the business.
Step 2 – Inspiring Confidence
In times of risk aversion employers need to focus on inspiring confidence throughout the hiring process. This can be achieved through a number of measures, starting with the initial approach to a candidate and continuing through each engagement. Professionalism and consistency is key as Fidelio has previously outlined in ‘Executive Search Redefined in the Brexit Era’.
As contact broadens from Search consultant to interviewers within the company, alignment is essential. Attracting talent is about building confidence as well as vision. Fidelio champions the importance of defining the role up-front, and aligning the Hiring Committee around the key deliverables of the role.
Building on this foundation to deliver a well-managed process is also critical. Clear guidance on timescales for interview and selection, and regular feedback throughout, demonstrates the company’s commitment to candidates. This becomes even more important at times of heightened international uncertainty and Fidelio is alert to the benefits managing the hiring process rigorously, ensuring clarity and transparency.
Step 3 – Accessing Fresh Talent = Diversity
There is clear challenge in attracting and retaining senior executive talent in highly uncertain times. Diversity both compounds this challenge and provides the solution.
On an international basis companies are being mandated to increase diversity and for some sectors short-term progress is tough.
In the UK, 2016 saw the introduction of new voluntary diversity targets, extending beyond the Board to Executive and direct report level, and importantly through the Parker Review also extending the scope to ethnic diversity. The Hampton-Alexander Review has built on the work of the Davies’ Review, setting tougher gender diversity targets of 33% at Board level across the FTSE 350 and, importantly, also Executive targets for the FTSE 100, all to be achieved by 2020.
Research from McKinsey’s ‘Diversity Matters’ and Credit Suisse’s ‘The CS Gender 3000: Women in Senior Management’ indicates diverse teams produce better business results, with significant ROE premium for diverse management teams. Sodexo’s ‘Workplace Trends 2016’ suggests diversity also produces a stronger culture of employee engagement. With millennials ranking positive work environment as their number one priority, it is clear that the benefits of diverse hiring translate down the pipeline.
Fidelio has frequently written on the topic of diversity, including recently in ‘Board Search – Activism vs. Fresh Perspective in 2017’, and has identified two key elements to engaging a rich and diverse pool of candidates. The first is consciously engaging with new talent pools, and moving away from reliance on the same channels in seeking fresh talent. The second lies with continuously refining the hiring process to increase objectivity, maximising the likelihood of open and forward looking decisions and outcomes.
Employers will have to work much harder to attract candidates
Gerwyn Davies, Public Policy Advisor, CIPD
The ability to articulate a compelling proposition, to demonstrate commitment and inspire confidence, as well as to access diverse pools of talent will provide clear competitive edge in attracting senior executive talent. The above sets out steps to achieve that end and to contribute to a sustainable future.
The Board and Executive leadership have a clear mandate to secure the healthy future of the company. Success depends on the ability to attract and retain senior executive talent.
We do not underestimate the challenge created by limited visibility and very considerable uncertainty for corporates compounded by a high degree of risk aversion on the part of candidates. However, in Fidelio’s work building public company leadership teams, we see clients taking the following practical steps to secure the pipeline of talented senior executives on an international basis:
- A focus on retention and motivation in particular through a strengthened Internal Communications function, as well as investment in development
- Securing access to external senior executives by paying attention to (i) inspiring confidence, (ii) demonstrating commitment and (iii) allowing increased diversity to contribute to the solution rather than the problem
This Overture has set out steps to ensure a healthy corporate future through securing access to senior executive talent. In the second Overture of the series we will review the role of the Board in securing sustainable value and growth against a very uncertain backdrop.